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Budget 16-17

HIGHLIGHTS OF UNION BUDGET 2016-17
Growth of Economy accelerated to 7.6% in 2015-16.
India hailed as a ‘bright spot’ amidst a slowing global economy by IMF.
Robust growth achieved despite very unfavourable global conditions and two consecutive years shortfall in monsoon by 13%
Foreign exchange reserves touched highest ever level of about 350 billion US dollars.
Despite increased devolution to States by 55% as a result of the 14th Finance Commission award, plan expenditure increased at RE stage in 2015-16 – in contrast to earlier years.

ROADMAP & PRIORITIES
'Transform India' to have a significant impact on economy and lives of people.
Government to focus on –




ensuring macro-economic stability and prudent fiscal management. boosting on domestic demand continuing with the pace of economic reforms and policy initiatives to change the lives of our people for the better.

Focus on enhancing expenditure in priority areas of - farm and rural sector, social sector, infrastructure sector employment generation and recapitalisation of the banks.

Focus on Vulnerable sections through:
1. Pradhan Mantri Fasal Bima Yojana
2. New health insurance scheme to protect against hospitalisation expenditure
3. facility of cooking gas connection for BPL families

FISCAL DISCIPLINE






Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and 3.5%.
Revenue Deficit target from 2.8% to 2.5% in RE 2015-16
Total expenditure projected at Rs. 19.78 lakh crore
Plan expenditure pegged at Rs. 5.50 lakh crore under Plan, increase of 15.3%
Non-Plan expenditure kept at Rs. 14.28 lakh crores

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Budget 16-17

Tax & Cess:












Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy
‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean Environment Cess’ and rate increased from Rs.200 per tonne to Rs.400 per tonne.
Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.
Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
13 cesses, levied by various Ministries in which revenue collection is less than Rs. 50 crore in a year to be abolished.
For non-residents providing alternative documents to PAN card, higher TDS not to apply.
Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.
Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of Rs. 10 lakh per annum.
Raise the ceiling of tax rebate under section 87A from Rs.2000 to Rs.5000 to lessen tax burden on individuals with income upto Rs.5 lacs.
Increase the limit of deduction of rent paid under section 80GG from Rs.24000 per annum to
Rs.60000, to provide relief to those who live in rented houses.

AGRICULTURE AND FARMERS’ WELFARE











Allocation for Agriculture and Farmers’ welfare is Rs. 35,984 crore
‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation.
Implementation of 89 irrigation projects under AIBP, which are languishing for a long time, will be fast tracked
A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about
Rs. 20,000 crore
Programme for sustainable management of ground water resources with an estimated cost of Rs.
6,000 crore will be implemented through multilateral funding
5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA
Soil Health Card scheme will cover all 14 crore farm holdings by March 2017.
2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years
Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and 'Organic Value Chain
Development in North East Region'.
Unified Agricultural Marketing ePlatform to provide a common e- market platform for wholesale markets 2/29/2016

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Budget 16-17





Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs. 19,000 crore. Will connect remaining 65,000 eligible habitations by 2019.
To reduce the burden of loan repayment on farmers, a provision of Rs. 15,000 crore has been made in the BE 2016-17 towards interest subvention
Allocation under Prime Minister Fasal Bima Yojana Rs. 5,500 crore.

Rs. 850 crore for four dairying projects –
1.
2.
3.
4.

‘Pashudhan Sanjivani’,
‘Nakul Swasthya Patra’,
‘E-Pashudhan Haat’ and
National Genomic Centre for indigenous breeds

RURAL SECTOR
1. Allocation for rural sector - Rs. 87,765 crore.
2. Rs. 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission
3. Every block under drought and rural distress will be taken up as an intensive Block under the Deen
Dayal Antyodaya Mission
4. A sum of Rs. 38,500 crore allocated for MGNREGS.
5. 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission
6. 100% village electrification by 1st May, 2018.
7. A new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
8. National Land Record Modernisation Programme has been revamped.
9. New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of Rs. 655 crore.

SOCIAL SECTOR INCLUDING HEALTH CARE









Allocation for social sector including education and health care – Rs.1,51,581 crore.
Rs. 2,000 crore allocated for initial cost of providing LPG connections to BPL families.
New health protection scheme will provide health cover up to Rs. One lakh per family. For senior citizens an additional top-up package up to Rs. 30,000 will be provided.
3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17.
‘National Dialysis Services Programme’ to be started under National Health Mission through PPP mode “Stand Up India Scheme” to facilitate at least two projects per bank branch. This will benefit at least 2.5 lakh entrepreneurs.
National Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with industry associations Allocation of Rs. 100 crore each for celebrating the Birth Centenary of Pandit Deen Dayal
Upadhyay and the 350th Birth Anniversary of Guru Gobind Singh.

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Budget 16-17

EDUCATION, SKILLS AND JOB CREATION










62 new Navodaya Vidyalayas will be opened
Sarva Shiksha Abhiyan to increasing focus on quality of education
Regulatory architecture to be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions
Higher Education Financing Agency to be set-up with initial capital base of Rs. 1000 Crores
Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up. SKILL DEVELOPMENT
Allocation for skill development – Rs. 1804. crore.
1500 Multi Skill Training Institutes to be set-up.
National Board for Skill Development Certification to be setup in partnership with the industry and academia
Entrepreneurship Education and Training through Massive Open Online Courses

JOB CREATION





GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment. Budget provision of Rs. 1000 crore for this scheme.
Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act
100 Model Career Centres to operational by the end of 2016-17 under National Career Service.
Model Shops and Establishments Bill to be circulated to States.

INFRASTRUCTURE AND INVESTMENT





Total investment in the road sector, including PMGSY allocation, would be Rs. 97,000 crore during
2016-17.
India’s highest ever kilometres of new highways were awarded in 2015. To approve nearly 10,000 kms of National Highways in 2016-17.
Allocation of Rs. 55,000 crore in the Budget for Roads. Additional Rs. 15,000 crore to be raised by
NHAI through bonds.
Total outlay for infrastructure - Rs. 2,21,246 crore.

FINANCIAL SECTOR REFORMS



A comprehensive Code on Resolution of Financial Firms to be introduced.
Statutory basis for a Monetary Policy framework and a Monetary Policy Committee through the
Finance Bill 2016.

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Budget 16-17











A Financial Data Management Centre to be set up.
RBI to facilitate retail participation in Government securities.
New derivative products will be developed by SEBI in the Commodity Derivatives market.
Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non institutional investors to invest in Securitization Receipts.
Comprehensive Central Legislation to be bought to deal with the menace of illicit deposit taking schemes. Increasing members and benches of the Securities Appellate Tribunal.
Allocation of Rs. 25,000 crore towards recapitalisation of Public Sector Banks.
Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to Rs. 1,80,000 crore. General Insurance Companies owned by the Government to be listed in the stock exchanges.

GOVERNANCE AND EASE OF DOING BUSINESS






Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the
Aadhar framework to be introduced.
Introduce DBT on pilot basis for fertilizer.
Automation facilities will be provided in 3 lakh fair price shops by March 2017.
Price Stabilisation Fund with a corpus of Rs. 900 crore to help maintain stable prices of Pulses.
“Ek Bharat Shreshtha Bharat” programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism.

BOOST EMPLOYMENT AND GROWTH








Increase the turnover limit under Presumptive taxation scheme under section 44AD of the Income
Tax Act to Rs. 2 crores to bring big relief to a large number of assessees in the MSME category.
Extend the presumptive taxation scheme with profit deemed to be 50%, to professionals with gross receipts up to Rs.50 lakh.
100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019.
MAT will apply in such cases.
Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.
Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health
Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disability.
Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.

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Budget 16-17

MOVING TOWARDS A PENSIONED SOCIETY







Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of
National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made on or from 1.4.2016.
Limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit. Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees.
Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

PROMOTING AFFORDABLE HOUSING





100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years.
MAT to apply.
Deduction for additional interest of Rs.50,000 per annum for loans up to Rs.35 lakh sanctioned in
2016-17 for first time home buyers, where house cost does not exceed Rs. 50 lakh.

TECHNOLOGY FOR ACCOUNTABILITY




Expansion in the scope of e-assessments to all assessees in 7 mega cities in the coming years.
Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in giving effect to Appellate order beyond ninety days.
‘e-Sahyog’ to be expanded to reduce compliance cost, especially for small taxpayers.

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